FINRA Fines Guggenheim Securities $800,000

The Financial Industry Regulatory Authority (FINRA) has fined Guggenheim Securities, LLC of New York $800,000 for failing to supervise two collateralized debt obligation (CDO) traders who engaged in activities to hide a trading loss. Alexander Rekeda, the former head of Guggenheim’s CDO Desk, was suspended for one year and fined $50,000. Timothy Day, a trader on Guggenheim’s CDO Desk, was suspended for four months and fined $20,000. Brad Bennett, FINRA’s enforcement chief, observed:

Guggenheim’s inadequate supervision allowed their traders to engage in extensive and repeated inappropriate actions to try to conceal a trading loss. The traders deceived their customer and supported their scheme through the use of inaccurate books and records, all of which went undetected by the firm.

FINRA found Guggenheim failed to conduct an adequate review of the CDO Desk’s trades, documentation concerning transactions by traders on the desk, and the traders’ email communications. While Guggenheim, Rekeda, and Day neither admitted nor denied the charges, they consented to the entry of FINRA’s findings. As part of the settlement, Guggenheim must retain an independent consultant to review and make recommendations concerning the adequacy of its supervisory procedures.